eToro Explores Launching Own Blockchain Amid Push for Tokenized Stocks

eToro's Blockchain Ambitions

eToro, the Israeli online brokerage that recently went public on Nasdaq, is exploring the possibility of launching its own blockchain. CEO Yoni Assia revealed in an interview that the company is evaluating partnerships with "four or five" different blockchain ecosystems to potentially create a sidechain 1

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. This move comes as eToro seeks to handle its growing volume of transactions more efficiently.

Assia explained, "We can't run today the millions of transactions that we're transacting on a monthly basis on existing blockchains. We'll need, by definition, to have a dedicated blockchain if we want to run the entire eToro ecosystem" 1

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. While the launch isn't imminent, the company is actively exploring options to enhance its technological infrastructure.

Tokenized Stocks on Ethereum

Alongside its blockchain exploration, eToro announced plans to launch tokenized stocks on the Ethereum blockchain. This initiative will allow for 24/7 trading of blockchain-wrapped shares from 100 popular U.S. companies and ETFs 2

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. Initially, access will be limited to European users through a waitlist system.

The move towards tokenized stocks is seen as a way to reduce trading costs and enable round-the-clock market operations. Assia, who has been considering the utility of tokenized stocks for over a decade, believes this approach could revolutionize trading 1

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Industry Trends and Competition

eToro's plans mirror similar moves by its competitor Robinhood, which launched tokenized stock trading in the European Union in June and announced plans for its own blockchain using Arbitrum's layer-2 technology 2

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. This trend highlights the growing interest in blockchain technology within the financial services sector.

Regulatory Considerations and Future Prospects

While tokenized stocks offer potential benefits, they also face regulatory scrutiny. Critics argue that tokenization could be used to circumvent public disclosure requirements for publicly traded companies 1

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. eToro is currently focusing on tokenizing public companies but Assia indicated that expanding into private company tokenization is "definitely on the radar" for the near future 1

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Market Response and Analyst Perspectives

The market's initial response to eToro's announcements was mixed, with the company's shares down almost 4% on the day of the news 1

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. However, some analysts remain optimistic about eToro's strategic position. Needham analyst John Todaro initiated coverage with a Buy rating and an $80 price target, viewing the platform's ability to bridge crypto and traditional finance as a growth opportunity 2

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